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GOP representative confident oil tax reform will pass this year

Democratic minority, Parnell have clashed over proposal

Rep. Eric Feige, R-Chickaloon, answers a reporter's question during a House Majority press conference on Friday at the Capitol. House Majority Leader Rep. Lance Pruitt, R-Anchorage, is in the foreground.

Republicans at a House majority caucus press conference Friday morning cited energy production, including measures to revive the decline in oil flowing through the trans-Alaska pipeline system, as a top issue for the caucus during this legislative session, with one representative expressing confidence that a bill to cut oil production taxes will pass this spring.

Rep. Eric Feige, R-Chickaloon, noted that many freshman legislators campaigned on reducing oil taxes “as a means to spur on the Alaskan economy.”

“I can tell you the mood in this building is considerably different than it was last year,” Feige said. “I have no doubt that we will pass, as a Legislature … an oil tax bill. Our job right now is to make sure that bill is a good deal for Alaska, make sure that bill does what we want it to do.”

Rep. Mike Hawker, R-Anchorage, remarked, “I think we all see this legislative session being dominated by issues of energy security and energy solutions across our state.”

Feige is the co-chairman of the House Resources Committee. He said his committee will take up House Bill 72 — Republican Gov. Sean Parnell’s proposal to reform the oil production tax regime by eliminating progressivity from the tax, along with certain tax credits, and introduce a “gross revenue exclusion” to exempt a portion of new oil production from taxation — on Feb. 11.

The Senate Special Committee on Trans-Alaska Pipeline System Throughput will also hold public hearings next week on the bill.

Parnell offered another bill to cut oil taxes last year as House Bill 110. While the Alaska House of Representatives approved the bill, it met heavy opposition in the Senate, and the governor ultimately pulled the bill from consideration amidst an acrimonious special session.

“The intellectual underpinnings behind what has gone into producing House Bill 72 are way ahead of where it was under House Bill 110,” said Feige. “These guys have put an awful lot of work into it.”

Feige and House Majority Leader Lance Pruitt, R-Anchorage, agreed that the 28th Legislature — which, as Feige pointed out, features three-quarters majorities in both the House and Senate, giving Republicans and the handful of Democrats who caucus with the majority in both chambers a legislative supermajority — may be more conducive to the idea of oil tax cuts than its predecessor.

“Perhaps in the last Legislature, there was more concern that we would somehow be hurting the state by reducing the revenues to the state government,” Feige said. “It’s not about the revenues to state government, it’s about the economy of the state of Alaska, and the oil industry is certainly a centerpiece of that economy.”

“I think you’ve got a group of people here who are tired of seeing decline,” Pruitt added. “I think it’s important that you’ve got a group of people here who recognize that if we don’t do something, then we’re going to be in a world of hurt. And we need to make some change. I think that’s what’s important to recognize, that you’ve got a group of people that are ready to see a lasting reform.”

Hawker said majority legislators want to be “making sure that our tax regime is as fair as possible to all sectors within our oil and gas sector — those that are just explorers, those that operate the legacy fields and those that are putting a lot of money into the satellite and more challenged developments right now.”

Asked about several bills that have been filed in the House on gun rights, including legislation introduced by House Speaker Mike Chenault, R-Nikiski, that would prevent federal officials from enforcing federal gun control regulations in Alaska, Pruitt indicated he sees the issue of guns as a lower priority than passing oil tax reform and a budget for fiscal year 2014.

“I think one of the things that’s been important to both members of our caucus as well as Alaskans is to maintain that Second Amendment right, and I think you’ll find that we will do whatever we can to defend that right, but I don’t think that you’ll find that it’s something that we’re looking at as if we don’t pass that, we will feel that we failed when we came out of the end of the session,” Pruitt said.

Pruitt reiterated that he is willing to work with both Parnell and Democrats in the minority on oil tax reform.

“Everyone is going to be a part of the conversation,” said Pruitt.

Hawker added, “I’m certainly looking forward to working with Rep. Feige (and) all members of this body that want to come to the table and productively discuss the way forward.”

The office of House Minority Leader Beth Kerttula, D-Juneau, was represented at the press conference by a Democratic staffer.

Kerttula said after the meeting that she is encouraged by House Republicans’ expressed willingness to work with the minority.

“I want to work with anybody who wants to make it more accessible to new entrants, to actually get production in the line and to have a fair share for Alaskans,” said Kerttula. “So I think that’s a good sign.”

Some members of the minority — including Kerttula, who referred to Parnell’s proposal Friday as “the worst giveaway yet” — have used harsh language to criticize Republicans’ positions on the oil tax issue.

“Maybe my tone of voice could be calmer when I talk about it,” Kerttula allowed, though she stood by Democrats’ negative characterizations of H.B. 72. She added, “I guess I get impassioned. But it’s not rhetoric. It’s a fact that that’s what will happen. Does that make it harder to work with Republicans? I don’t believe so, but I think that you’ve got to focus on what the issues are and you’ve got to get that information out.”

Asked whether she is hopeful that a compromise can be reached, Kerttula said she is.

“I’m always hopeful,” Kerttula said, laughing. “I mean, I’m the first one to put my hand out and say, ‘How can we make this work?’ But that’s the attitude of my caucus. You know, we’re going to be strong and say what the truth of it is, but we’re also going to be working as hard as we can to save something good for Alaskans. But I’m not going to bend my values to do that.”